Dismantling America

Though Bush 41 and Bush 43 often disagreed, one issue did unite them both with Bill Clinton: protectionism.

Globalists all, they rejected any federal measure to protect America’s industrial base, economic independence or the wages of U.S. workers.

Together they rammed through NAFTA, brought America under the World Trade Organization, abolished tariffs and granted Chinese-made goods unrestricted access to the immense U.S. market.

Charles McMillion of MBG Information Services has compiled, in 44 pages of charts and graphs, the results of two decades of this Bush-Clinton experiment in globalization. His compilation might be titled, “Indices of the Industrial Decline and Fall of the United States.”

From 2000 to 2009, industrial production declined here for the first time since the 1930s. Gross domestic product also fell, and we actually lost jobs.

In traded goods alone, we ran up $6.2 trillion in deficits — $3.8 trillion of that in manufactured goods.

Things that we once made in America — indeed, we made everything — we now buy from abroad with money that we borrow from abroad.

Over this Lost Decade, 5.8 million manufacturing jobs, one of every three we had in Y2K, disappeared. That unprecedented job loss was partly made up by adding 1.9 million government workers.

The last decade was the first in history where government employed more workers than manufacturing, a stunning development to those of us who remember an America where nearly one-third of the U.S. labor force was producing almost all of our goods and much of the world’s, as well.

Not to worry, we hear, the foreign products we buy are toys and low-tech goods. We keep the high-tech jobs here in the U.S.A.

Sorry. U.S. trade surpluses in advanced technology products ended in Bush’s first term. The last three years we have run annual trade deficits in ATP of nearly $70 billion with China alone.

About our dependency on Mideast oil we hear endless wailing.

Yet most of our imported oil comes from Canada, Mexico, Venezuela, Nigeria, and Angola. And for every dollar we send abroad for oil or gas, we send $4.20 abroad for manufactured goods. Why is a dependency on the Persian Gulf for a fraction of the oil we consume more of a danger than a huge growing dependency on China for the necessities of our national life?

How great is that dependency?

China accounts for 83 percent of the U.S. global trade deficit in manufactures and 84 percent of our global trade deficit in electronics and machinery.

Over the last decade, our total trade deficit with China in manufactured goods was $1.75 trillion, which explains why China, its cash reserves approaching $3 trillion, holds the mortgage on America.

This week came a report that Detroit, forge and furnace of the Arsenal of Democracy in World War II, is considering razing a fourth of the city and turning it into farm and pastureland. Did the $1.2 trillion trade deficit we ran in autos and parts last decade help kill Detroit?

And if our purpose with NAFTA was to assist our neighbor Mexico, consider. Textile and apparel imports from China are now five times the dollar value of those imports from Mexico and Canada combined.

As exports are added to a nation’s GDP, and a trade deficit subtracted, the U.S. trade deficits that have averaged $500 billion to $600 billion a year for 10 years represent the single greatest factor pulling the United States down and raising China up into a rival for world power.

Yet what is as astonishing as these indices of American decline is the indifference, the insouciance of our political class. Do they care?

How can one explain it?

Ignorance of history is surely one explanation. How many know that every modern nation that rose to world power did so by sheltering and nurturing its manufacturing and industrial base — from Britain under the Acts of Navigation to 1850, to protectionist America from the Civil War to the Roaring Twenties, to Bismarck’s Germany before World War I, to Stalin’s Russia, to postwar Japan, to China today?

No nation rose to world power on free trade. From Britain after 1860 to America after 1960, free trade has been the policy of powers that put consumption before production and today before tomorrow.

Nations rise on economic nationalism; they descend on free trade.

Ideology is another explanation. Even a (Milton) Friedmanite free-trader should be able to see the disaster all around us and ask: What benefit does America receive from these mountains of imported goods to justify the terrible damage done to our country and countrymen?

Can they not see the correlation between the trade deficits and relative decline?

Republicans seem certain to benefit from the nation’s economic crisis this November. But is there any evidence they have learned anything about economics from the disastrous Bush decade?

Do they have any ideas for a wholesale restructuring of U.S. trade and tax policy, for a course correction to prevent America’s continuing decline?

The dismantling of America is, at this point, just about a done deal. I cannot think of any president in my lifetime or any U.S. congressman who has not voted for globalism and the destruction of the USA industries.

The libertarian ideology worships at the altar of “free markets” and “free trade”, both concepts being a boot kick in the face of the US economy.

Mr. Buchanan seems to be taking a narrow view of U.S. history in regard to globalist policies. The Overseas Private Investment Corporation (OPIC) was founded in 1971 and is a quasi U.S. government agency and a United Nations nongovernmental organization. OPIC rewards U.S. companies for moving their industrial operations overseas. That is only one of many such programs sabotaging the USA and promoted by our “leaders over the last at least 40 years.

Assuming all this is true, and I think it is, the question is what to do about it. If one assumes corporate America is corrupt and will sell out the country for money, and that the politicians to whom the corporates donate are corrupt and will sell out the citizenry for money, neither of these is likely to change anytime soon, nor permit any reform that would require them to.

However, the citizenry have it in their power to take these matters into their own hands. Cheap plastic goods from China are by definition shoddy, disposable, bloodless, and waste petroleum-based energy in both their manufacture and transport. If people simply were to opt for things made, preferably hand crafted, in the USA, and insist on patronizing places that sell them, even at a higher retail price (for more durable and attractive goods), that would change things. It could unite both conservatives and progressives, regardless of other cultural or political preferences, and show the power of a truly free market. All that is lacking is the understanding, and the will.

Years of political class and corporatist sell out of Americans for self-enrichment and the Globalist agenda has finally come home to roost

Who benefited from the sell-out? The multi-national corporations that were granted access to the wealthy, developed, mature American markets (which took decades, if no centuries, to build) without having to pay so much as a dime to offset the fact that their foreign-made goods were destroying American jobs; the importers and retailers, who could buy abroad cheap, and sell domestically at a big markup; the political class itself, which was well rewarded by the schemers either in campaign donations or cushy corporate jobs once leaving office; the Big Government pushers, which knew Americans would be forced to turn to government more and more for “answers” to their problems, which corrupt government itself was engineering; and of course, the Wall Street banksters, who were greasing the skids for it all, as always.

Now that the world is figuring out America is just printing money to compensate for its voodoo economy and will no doubt stop buying U.S. debt and turn away from the dollar shortly, where will leviathan government turn next for its sustenance? Either it will have to cannibalize American personal wealth and American business, or it will have to invade and plunder foreign countries, like it attempted in Iraq (at a huge net loss, but maybe second times a charm).

Chinese goods are attractive because of inflation, taxation, regulation, labor and credit in the US market. We can’t manage our way out of the problems created by this environment by forcing businesses and consumers to not react to the environment.

Tariffs have a place in combating the non-free trade practices of other nations, but it can’t overcome the disadvantages of a toxic business environment.

The reason most of the political class doesn’t care about the American manufacturing base– and the workers it supports– is that their most powerful constituency is the investor class, including the many regular folks who are dependent on private investment gains so the growth of their meager nest eggs can beat inflation. “Traitorous and greedy” corporations must satisfy the demands of their shareholders for returns that outpace the devaluation of the dollar caused by Federal Reserve and government actions. The easiest way to increase profits and shareholder value is to continually cut costs, so that Americans can continue to afford to buy their goods with continually weaker dollars. They can’t do that stateside with continually increasing costs resulting from domestic inflation, a growing need to increase taxes to support public debt, and “public outcry” for more costly bureaucratic control.

The reason the rest of the political class that does care is trying to treat the symptoms with protectionism and other forms of control is that they don’t understand or don’t want to expose the root causes.

Are corporatists buying advantages in the American marketplace? Yes, but we should look first at who is selling them.

Those bad Chinese! Forcing their unwanted products on us against our will. Wait! Didn’t we voluntarily walk to the store and bought Chinese merchandise because it was cheaper?
What about quality? According to the buyer the quality was good enough for the price. What do Americans want? They seem to be voting with their wallets. But there’s a simple solution: convince Americans to buy american products at higher prices. That’s right! Then you will really need a big salary. Let’s see who is going to pay it to you. Or you could reduce taxes so we actually have more money to spend…now THAT is a fantasy! You see the problem? Every solution involves not allowing the American people decide what they want to do with their own money. Just like Britain, Bismark, Stalin, and China.

Globalization is as inevitable as the general tendency of nature to avoid vacuum, ceteris paribas.

Root of the current trade-deficit and budget deficit problems began during Reagan administration. During Bill Clinton era, however, problems just manifested itself in multiple facets.

American university professors I have talked to do not appear to be worried at all. They are extremely busy minding their own business of tenure-ship and higher and higher salaries.

American politicians are shrewd. They know corporate America is where their political campaign money comes from.

That source of money, which is corporate America, finds globalization of labor-cost arbitrage is highly lucrative.

Simply put, to produce same widget in Detroit or in any city (you name it!) in China makes a huge difference in profits due to labor-cost arbitrage.

So, corporate America is not going to produce things here. Corporate America will keep importing goods from overseas and receive huge tax-breaks from the U.S. government.

Furthermore, corporate America will bring highly skilled workers from English speaking third-world nations with H1B visas so that corporate America does not need to hire American citizens. Here again comes labor-cost arbitrage. After all, American citizens cost more in wages!

By doing so, corporate America will continue to make higher and higher profits and pay humongous salaries and bonuses to top executives.

Those top executives will decide to finance political campaigns of American politicians so that corporate America will continue to receive tax-breaks from the legislations passed by those politicians.

Unemployment problem is not a problem for corporate America. Unemployment is the sole problem of an unemployed American.

Corporate America loves tax-breaks so that jobs can be off-shored and skilled foreigners can be brought to the United States on H1B visas and Green Cards via an annual lottery system.

Corporate America also gives money to the American universities so that tenured professors can continue to glorify the greatness of globalization of labor-cost arbitrage.

After a lifetime in the news business, there are no surprises. However, my sadness for the generations of youth, and generation unborn, is my one reaction/emotion.
The monsters are out in the open, (how more open can one be than to declare that corporations are people?) and are rejecting all efforts to stop the destruction/dismantling of America.
It is not fair, however, to blame only the past three presidents, or the past decade of congresses that were complicit in every way. There has been, in practical terms, not one president, during the past half century who has done more than lip-service to help “protect” America.
Our True threat is not China, not Japan, not overseas, it is those who allow China, Japan, and the rest, to mortgage U S with their products, goods, services. In fact, for an inexplicable reason, encourage the destruction of America.
Abolish, destroy, end, the Federal Reserve, and the bulk of our monetary troubles would start to end in one year.
nuf said,
Glenn Scheer

If I’m allowed, I’d like to complete to my previous post by saying that it is to this blind warthog of a force (i.e. unregulated Capitalism) – void of all sense of responsibility to its societal cradle – that Libertarians, Tea Partiers and many Republicans would like to hitch the future of the Republic.

I’d like to remind them that “he who tramples his own house shall inherit the wind.”

Glenn Scheer is correct in saying that the root cause of most of our problems is the Federal Reserve. If we simply shut down that entity and went back to real money, backed by some commodity (gold, silver, oil, whatever), our economy would rapidly begin to right itself. Removing the Fed from the scene would prevent the government from meddling in the economy the way it does on a regular basis. It could still raise and lower taxes, make tariffs, etc., but it could not inflate and deflate the value of the currency as it today does at will. This is the root cause of our disaster in my opinion.

My father was born in 1915, law degree by 1937, FBI agent, 1941 went to Japan as a Marine officer. He told me when everyone was worried about Russia (USSR) that China was who we should be concerned with.
Son they have a billion of them over there willing to work for a dollar a day!

I am a big fan of this site, but protectianism is not a conservative principle. The USA has a lot to offer the world, the IPod is manufactured in China but who in the world says it is Chinese ? it is an American product.. If one has a productive workforce then one does not need to fear other competitors and try to set up barriers to that competition.

The US needs less red tape and government know it alls to tell businesses how to run themselves. Freedom implies free trade not “fair trade”, people should be able to choose who they want to trade with and what they want to buy, a nation that practices this the most will be the wealthiest.

It seems that a lot of the commenters on this column– including some who might otherwise call themselves Conservative– are schooled only in the Marxist/collectivist paradigm of economics. (Thank you public schools!) Please take some time to learn a more logical, less ideological, perspective: mises.org

Greed and the human desire for more, in general, will never go away. The problems of our economy are the result of the subversion of natural free-market principles: sanctity of private property, free and voluntary exchange, private responsibility for risk and consequences.

The problem is not with Libertarian principles of individuals following their own self interest but instead a corruption of the free market system that rewards people who use government power and extortion of taxes to fund their corporations. A truly free market backed by hard currency would not permit for these fluctuations in currency value. Release restrictions on entrepreneurs, end the fed and lower taxes by ending spending on military adventurism and entitlements.

More collectivism/central planning will lead to the bottom of this rabbit hole and it’s a place none of us want to go.

I just don’t know how anybody – anybody in their right mind, that is – can possibly argue that unregulated markets are the answer to all our problems.

This Ayn Rand knee-jerk mentality so popular with Libertarians just doesn’t square with reality. One could argue that it’s a beautiful theory (like Communism or true Christianity) that has been killed by a nasty host of recalcitrant facts.

Look at what the unregulated banks did to this country over the last few years. Look at what American companies are doing – taking their jobs to Mexico, to India, to China, to…anywhere, but here.

I’m glad that Pat explains our disastrous trade imbalance results not from NAFTA and CAFTA, but from unrestricted import of Chinese goods. If our free trade agreements with neighboring countries, those in our hemisphere, work as intended, the Mexican and Central American economies would be prospering, the influence of the drug cartel would be less, and the flow of undocumented aliens from the South would be considerably less. Plus, these countries would be far more stable and far friendlier to the U.S. If we are to export any of our wealth abroad, this is where it should be, not to China and the Middle East, where only our enemies and potential adversaries are strengthened. Bring our troops home, rebuild the Great Wall of China, but let free trade build a sphere of influence and comity for us throughout the Americas and the Pacific – the future patrimony of our nation when the overpopulated continents of the Eastern Hemisphere are scrambling to exploit and live on their diminishing resources.

Another good column in a long line of good columns by a P.B. long ago freed from the occupational bondage of organized politics and its paymasters on wall street and in ” corporate America ” . Too bad Pat didn’t tell these elite “internationalists” masquerading as patriots where to go when he had the power to make them listen. He must have some regrets.

The American manufacturing decline equates to the financialization of the US economy. This is simply the next step in America’s economic demise, and thus, America’s overall decline. We all know that our childen and grandchildren will not have the same standard of living as we have experienced. More concerning, is how long our political system can last with a smaller and declining middle class. Were just beginning to experience the angst associated with high unemployment and allocation of diminishing resources.

Why is there such an obsession with having all our goods made in China, and only China? Fifty years ago we weren’t even speaking to them, and our economy didn’t suffer in the least. Today, if cheap shoddy imports are so vital to our economy, we can have them manufactured in Mexico, India, Brazil, or any number of East European countries, and probably save some money on the shipping. But why pass them all up infavor of China?

Could the real reason be that we are being used to prop up the world’s last major Communist regime?

In the UK we’re the same. We’re surviving in an economy of the greedy. Nobody wants to work for nothing, nobody wants to pay more than they have to and when you can have a chinese good shipped and delivered for the same price as 3 from the mainland, where’s the point in producing homemade items anymore?

Globalization was not meant to be like this. China has monopolized trade when we should have been working with our neighbors, the Mexican and Central American nations. How did we end up in such a disaster of a deal?